Kogan facing Federal Court

The ACCC has instituted proceedings against Kogan Australia Pty Ltd in the Federal Court alleging that the online retailer made false or misleading representations about a 10% discount promotion, in breach of the Australian Consumer Law.

Kogan ran an online promotion between June 27 and 30, 2018 where consumers could obtain a 10% discount on most of its products by using the discount code “TAXTIME”. The promotion was held ahead of the end of the 2017/18 financial year. The promotion was published on its website and via text messages and emails to consumers.

However, in a statement to the Australian Securities Exchange (ASX), Kogan.com strongly denies the allegations and will defend the proceedings. “The proceedings commenced by the ACCC ignore critical facts and matters which are in Kogan.com’s view highly relevant in assessing the overall impression of the promotion by consumers who are intimately familiar with online retailing and how a discount code functions,” the statement read.

The ACCC alleges that the advertisements were false or misleading because Kogan increased the prices of more than 600 of its products immediately before the promotion, and in most cases prices increased by at least 10%.

“We allege that Kogan’s advertisements were likely to have caused consumers to think they were getting products below their usual prices. In fact, Kogan had inflated product prices which we say created a false impression of the effective discount,” ACCC commissioner Sarah Court said.

Towards the end of the promotion period, email advertisements used statements such as “48 hours left!” and “Ends midnight tonight!” which the ACCC alleges gave the impression that consumers only had a limited time to purchase at the “discounted” prices. However, Kogan reduced the prices of the affected products shortly after the promotion ended, many back to their pre-promotion prices.

“Businesses must not make claims to consumers about discounts or sales unless they are offering genuine savings,” Court said.

Kogan.com also stated that: “Kogan.com’s marketing collateral in connection with the promotion was carefully considered and was drafted specifically to avoid the type of confusion alleged by the ACCC. Kogan.com at all times made clear that the price reduction applied at the time of checkout. At checkout all customers were made aware of the full price they would pay for the product and the price reduction that would be achieved by using the discount code. There was no confusion caused. Kogan.com has always put its customers’ interests first and continues to do so.

“Kogan.com cooperated fully with the ACCC throughout its investigation and explained in detail the above facts and matters. Kogan.com is disappointed that the ACCC has nevertheless decided to issue proceedings against Kogan.com. Kogan.com did not gain any material financial benefit as a result of the promotion. Kogan.com does not expect any adverse change to its ongoing promotional activities as a result of this matter”.

The ACCC is seeking penalties, injunctions, declarations, corrective notices and costs from Kogan.

The ACCC has previously taken enforcement action against other related Kogan entities in 2016 and 2009 for allegedly engaging in pricing conduct which raised similar concerns.